Being stealthy is not usually healthy and not a great way for you to get wealthy.

If you hang around startup founders long enough, you’ll ultimately come across someone that directly or indirectly claims that their company is in “stealth mode”. This can come in any number of flavors: “We’re not talking about our plans just yet.” Or, “We’d need you to sign an NDA or confidentiality agreement before we can reveal our plans.” Or, “We’d tell you what we were up to, but then we’d have to kill you.”

As it turns out, startups are indeed often coy about their plans and don’t like to reveal too much. But, this is rarely because they are in so-called “stealth” mode, and have some big secret to global domination that they can’t tell you. The rationale is often much simpler than that.

Most Likely Reasons Startups Won’t Talk

Lack of Direction: The founders have not quite figured out exactly what they’re doing yet, and rather than provide a round-about answer that takes an hour and lots of hand waving, it’s easier just to say “we’re not talking right now”. Note that I do not mean this in a disparaging way. Lots of startups in the early stages face this identity crisis and don’t really know what they want to do just yet.

Lack of Focus: This is similar to the above, but the startup instead of having no direction, has too many directions. There are several possible businesses it could pursue, and it hasn’t settled on one just yet.

Lack of Commitment: One or more of the founders have not yet left their day jobs, and as such “revealing” their plans is a little premature. The company doesn’t feel real even to them, and they struggle to articulate the “big vision” since they haven’t quite taken the leap yet.

Lack of A Solution: Sometimes, startups have figured out precisely what problem they want to solve, and who they want to solve it for, but they don’t have the details worked out just yet. It may be that there’s a technically hard problem to solve and they simply don’t know how. If they try and describe what problem they’re going to solve to others, they immediately get cynical questions on how they possibly think they can solve that problem. Instead of attempting to dance around it, it’s often easier to say: “We’re still thinking through this and are exploring some possible approaches.”

They Have A Secret: This is last on my list, but needs to be included for completeness, if nothing else. There are some (but few) startups that truly do have a secret worth keeping that they simply can’t reveal. In most cases, this is misguided as they have more to gain by revealing their direction instead of hiding it, but there are occasions where the startup is truly in “stealth” and looking to hold-off any public discussion until a pre-conceived date or milestone.

For the record, my current startup has been in Category 2 above for a little while now. We’ve had a number of possible directions that we could pursue, and didn’t really settle on one until recently (and even then, we’re still fine tuning). But, we’re pretty clear about this indecision to folks that we talk to. We don’t claim to have some big secret that we can’t tell anyone. Quite the contrary, we’ll talk to anyone that is willing to listen.

So, the question to ask is: “So what?” If you’re an entrepreneur, what’s the harm in not talking regardless of which of the above reasons might be the motivation? That is an excellent question.

Here are the reasons why I think startups should talk more (not less) about what’s actually going on:

By being candid with your current challenges, you might be able to get some help. My hope is that you’re talking to smart, competent people anyways, and it’s unlikely they can really provide any guidance or commentary if they don’t know what you’re trying to do.

It’s really, really hard to recruit people without opening up and sharing with them what’s going on and where they can help. In many cases, the people you are recruiting would likely be able to help with whatever the current challenge is. Much of your recruitment will likely occur indirectly. You talk to someone today who knows someone who knows someone that hears about your business venture and makes contact. If nobody has any clue what you’re doing, you’re not going to get this word of mouth team-building going on.

If you have latent competitors (which you do), you’re probably better off coming out into the open sooner instead of discovering months later that there was someone doing exactly what you were (but neither of you could figure that out, because you were both in “stealth” mode). This is my single biggest reasons. There’s simply too much duplication out there and getting early visibility on what you’re doing and what others are doing helps build better businesses – and can save a lot of pain, agony and money.

If your idea is stupid, infeasible, misguided (or all three), there’s no better way to figure this out early (and you need to figure it out early), then to talk about what you’re doing. Let people throw rocks at the idea. Try to describe your approach. Try to reason. Try to defend. Adjust, tweak. Lather, rinse, repeat. This type of “iterative” approach to refining your business is invaluable and it’s impossible to do this if you refuse to talk to anyone in detail.

Summary Of My Point: Before you decide to clam-up and guard your “super secret business idea”, make sure that you have something worth guarding, and that it’s in your best interests to do so. More often than not, you’re better not being coy, and doing some talking.

Nice summary, Dharmesh. But how would you categorize a company that wants to hold off until the launch for fear of having some one else pick up the idea while still in development?

Regards,Bandi

annarbor87

while i think your comments are largely accurate the real issue is a little more textured than that. there is a big difference between not telling anyone what you're doing and not telling the world that you just raised a nice chunk of institutional capital. as much of the vc market is "me too" capital, the last thing an entrepreneur wants is for a bunch of other vcs to begin massively funding the space. while this could be positive and validating, it could also reduce the time that a truly innovative company has to exploit its time-to-market advantage. and this is the cost of which i speak. is this company operating in "stealth" mode? i guess by your definition probably not, but i've heard others refer to my scenario as being in stealth mode as well.

annarbor87

while i think your comments are largely accurate the real issue is a little more textured than that. there is a big difference between not telling anyone what you're doing and not telling the world that you just raised a nice chunk of institutional capital. as much of the vc market is "me too" capital, the last thing an entrepreneur wants is for a bunch of other vcs to begin massively funding the space. while this could be positive and validating, it could also reduce the time that a truly innovative company has to exploit its time-to-market advantage. and this is the cost of which i speak. is this company operating in "stealth" mode? i guess by your definition probably not, but i've heard others refer to my scenario as being in stealth mode as well.

I definitely agree with every sentiment above, when people ask me if they should sign an NDA before I talk about my project under development I say that I wouldn't want them too...if they want to steal the idea and compete its better for me. It proves the idea is awesome and legitimate! Great post Dharmsh, thanks!

I definitely agree with every sentiment above, when people ask me if they should sign an NDA before I talk about my project under development I say that I wouldn't want them too...if they want to steal the idea and compete its better for me. It proves the idea is awesome and legitimate! Great post Dharmsh, thanks!

kunal

Great points Dharmesh. I have been suffering from some of these issues with my startup for months now. Its hard to convince yourself that discussing your ideas will help rather than harm your chances of success.

kunal

Great points Dharmesh. I have been suffering from some of these issues with my startup for months now. Its hard to convince yourself that discussing your ideas will help rather than harm your chances of success.

malcolm

Ahh...yep. Have been looking for a good reason to tell my lawyer where he should keep his stack of NDA's.

malcolm

Ahh...yep. Have been looking for a good reason to tell my lawyer where he should keep his stack of NDA's.